The balance of payments between television platforms and public service broadcasters

4EPG

82. The current EPG framework may not adequately reflect the current landscape of TV services, nor be sufficiently adaptable for the future. We have identified three areas where amendments could be made if we were to maintain the current policy ambition:

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  amending the existing framework to be technology neutral,
  
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  including VOD content where this is part of a package offered alongside broadcast content, and;
  
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  integrating technologically advanced service (e.g. HD services) into the existing framework.
  

83. In making these changes, we would need to retain a licencing system for EPG providers; we do not however propose adding to existing legislation by further defining ‘appropriate prominence’⁴¹. The detailed options are discussed in more detail in Annex A, these reflect discussions with stakeholders subsequent to the publication of the Connectivity, Content and Consumers strategy paper.

84. An alternative view is that deregulation would provide a productive route to ensure the best quality content is/remains easily discoverable for viewers while also maximising investment and supporting a diverse, vibrant and healthy creative sector.  It is possible that audience expectation and commercial benefit are sufficient to ensure high quality PSB programming remains easily discoverable on platforms, without the need for prominence regulation.
85. Moreover, in the long-term, it is not clear whether traditional EPGs listing information about linear TV broadcasts will remain relevant, for example if audiences use alternative means to search for content or increasingly choose to consume content outside the linear schedule.  Rather than updating the existing regime for technical innovation, deregulating would recognise that the importance of traditional EPGs may be declining as TV viewing habits change, and that discoverability may be being unnecessarily maintained at the cost of a more dynamic market in which non-PSB channels could more effectively compete with the commercial PSBs for audience share and PSBs and platforms could negotiate more freely. We welcome evidence on what the impact of deregulating EPG would mean in practice for PSB discoverability for audiences, the ability of PSBs and platforms to negotiate effectively on carriage deals and on the PSB compact.  In particular, we welcome views on the impact deregulation could have on channels’ incentives and ability to compete more effectively for audience share, and therefore potentially on net investment in the creative industries sector overall.

Q11. Do you think that updating the existing regime to reflect technical innovations and entrenching the PSBs’ prominent position would encourage more long term investment in content and services and if so how might this impact be quantified? Q12. What steps would have to occur to translate the removal of appropriate prominence requirements into more effective competition between broadcasters for audience share and content investment benefits for viewers? Q13. In order to maintain the current policy objective of PSB discoverability in view of technical developments, do you believe that the current EPG framework would require updating in order to remain fit-for-purpose? …

… Q14. If so, do you agree with the three areas we have highlighted for review: Making the existing framework technology neutral; Including VoD content, and; Integrating technologically advanced service (e.g. HD services) into the existing framework? (Detailed options are discussed in the Appendix) Q15. Alternatively, do you believe that deregulation would provide a productive route to ensure the best quality content is easily discoverable for viewers while also maximising investment? Q16.What would be the impact of removing the requirement for EPG providers to offer commercial PSBs appropriate prominence on: Discoverability of PSB content including Local TV ? The PSB compact? Net investment in the creative industries sector overall, including investment in content? The ability of commercial PSBs and non-PSB channels to make medium/long-term investment commitments? The ability of non-PSB channels to compete more effectively with commercial PSB channels?

Options to update the EPG framework

Detailed options to update the existing EPG framework
(Option 1) Create a technology neutral framework
1. At present we capture only EPGs which take their information from a broadcast data stream, but in the converged media environment we are aware that some services providing materially the same function as broadcast EPGs, are underpinned partly or completely by data transmitted via the internet (e.g. on the Virgin TiVo EPG or TV-CatchUp).
2. While services that provide an EPG over the Internet require an Ofcom licence, TV sets with inbuilt software that takes an EPG data stream and turns it into a list of recommendations or reorders the channels is not subject to an EPG licence. In order to remain technology neutral, this option would extend prominence to apply regardless of how the information underpinning an EPG services is communicated.
(Option 2) Include video-on-demand content
3. Currently, the EPG definition only extends to live broadcast content. It is possible that content transmitted via the Internet on-demand e.g. through services like iPlayer might not be as easily discoverable in the future. Currently, the PSB players (e.g. iPlayer) which distribute VoD content are prominent on the EPG-like listings of VoD players on the major platforms, this option would ensure this continues.
Delivering options 1 and 2
Legislation
4. To create a technologically neutral EPG definition and to include video-on-demand-content one option would be to amend the EPG statutory framework in sections 310 and 311 of the Communication Act 2003 (see Annex A). This would confer a power on the Secretary of State to set out the definition of an EPG in secondary legislation, i.e. to specify the types of services that are subject to the prominence regime. This enabling power would be broad enough to include EPGs for current linear programme services, on-demand programme services and other types of interfaces by which consumers are able to access public service content. The secondary legislation would set out the specific definition of EPG services covered at any particular time and would be made following consultation with Ofcom and the industry.
5. These changes would give sufficient flexibility to ensure that the definition of EPGs could be updated in light of future demands. For example, at this stage we would not consider it appropriate to capture:

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  Video-on-Demand (VoD) only services (e.g. Lovefilm or Netflix) where broadcast content is available alongside other content, such as film.
  
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  Platforms that are very small in scale, where we want to encourage technological innovations like Beamly⁴² which are opening new ways for consumers to find and access content.
  
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  Services where their core offer to consumers is the ability to list content on the basis of social recommendation, where the consumer communication is the basis of the EPG.
  

6. However, in view of constantly evolving technology, the aim of this approach would be to allow Government to respond flexibly to new circumstances.

Licensing system
7. At present, EPG service providers need to obtain a licence to operate under the Broadcasting Acts if they are made available for reception by members of the public and are broadcast from a satellite, or distributed by any means using an electronic communications network. VoD content is not broadcast and would not be covered by this definition.
8. If we include VoD content in the prominence regime one option would be to regulate the EPG listing of VoD players via a notification system similar to that applying to providers of VoD services under section 368BA of the Communications Act 2003. However, we think it would be undesirable to have two different systems – one for broadcast EPGs and one for VoD listings.
9. In terms of simplicity and ease of understanding, we think it would be preferable to extend the current licensing system to cover this and all the EPGs proposed under the new definition. However, this would only be allowable under EU law if the relevant EPG service is not an information society service⁴³. We do not believe that an EPG listing VoD services would be an information society service as the EPG would be a point to multipoint service (e.g. the Sky listing of VoD players is communicated to all households with a Sky set top box in parallel), as opposed to a point to point service (i.e. provided at the individual request of the viewer). However, it is possible that new services could develop in the future that might fall within the definition of an information society service. As a consequence, we would be interested in views on the merits of moving to a notification system to cover all the EPGs proposed under a new, technology neutral definition, so as to further future proof the prominence regime. For example, this could be similar to the notification system applying to providers of VoD services under section 368BA of the Communications Act 2003.
10. Providers of EPG services would continue to be required to comply with the EPG Code of Practice and Ofcom would retain the same enforcement powers as now to deal with breaches of this condition.
Integrating technologically advanced services
11. High definition (HD) channels can either be accessed from within the main EPG menu, or from within an HD submenu. The prominence of PSB HD channels in both menus is variable, despite the fact that, for example, BBC 2 SD and BBC 2 HD are perfect simulcasts in offering exactly the same programmes. We are under the impression that the consumer take-up of these services is not as high as might be expected given sales of HD enabled TV-sets. For example BBC 1 HD is only at 141 in the main menu after SKY 1 HD (106), SKY Living HD (107) and SKY Atlantic HD (108) but also after BBC 2 HD (102) and BBC 3 HD (115), placing BBC 1 only on the second page of the HD sub-menu. We are concerned that the lack of visibility of HD services in EPGs is holding up take up, and that for those households that use the HD menu as their main menu, PSB content is less prominent⁴⁴. Today most programmes are offered as a SD and as a HD service. We do not think that SD and HD services should be listed next to each other on the EPG but we do think that there should be a consumer friendly way of accessing PSB programmes in the best quality that the consumer’s TV-set can receive.
12. We understand that there are different technological solutions: HD channels can swap into SD slots where a broadcaster offers their content in HD and the consumer has the technology to enjoy it. Where the consumer’s TV set only receives content in SD quality that is what they will access from the same EPG listing. We believe EPG providers should ensure that the highest quality version of PSB content that the consumer can access – whether that’s HD or in future UHD - is available from the most prominent listing. Government is aware that there are some services, such as BBC1, which are not perfect simulcasts in SD and HD as they offer local news and local TV. If there is no feasible technological solution for accessing these channels or programmes in HD and SD from the same slot by the consumer an alternative solution is that Ofcom has the discretion to determine what appropriate prominence is in this case. The Government wants to see EPGs listing the best quality version of content is offered to viewers, and welcomes view on whether legislation is necessary to achieve this outcome for viewers. We particularly welcome views on how technically feasible the former option is, and whether the latter would be sufficient to ensure HD content is as prominent as its SD counterpart.

Consultation questions (Appendix A): Q17. Do you agree with our proposals to amend the EPG definition in law to make it: i) technologically neutral - so that so regardless of how the information on the content is communicated to the EPG service it will be within scope of regulation; ii) include video-on-demand content? if not, why not? Q18. Do you agree that it is preferable to have the same regulatory system for EPGs for broadcast and VoD services or do you think it is better to introduce a separate regulatory system for VoD EPGs? If the latter, what should that look like? Q19. Do you think a change from the current licencing system to a notification system is necessary or preferable? What impact is to be expected from a change from a licencing to a notification system? Q20. Do you agree that there is a technologically feasible solution to create a system that would enable EPG providers to substitute in the highest quality PSB content that each consumer can access (depending on their TV) from the same slot? Does this solution only cover perfect simulcasts in HD and SD? If not, is it for Ofcom to determine what appropriate prominence is if the channel or programme is not an SD – HD perfect simulcast? Q21. If there is no technologically feasible solution, do you think the EPG prominence regulation should be extended to HD sub-genre menus?

1^ http://stakeholders.ofcom.org.uk/binaries/broadcast/reviews-investigations/psb-review/psb3/psb-review-ipsos-mori.PDF

2^ http://stakeholders.ofcom.org.uk/binaries/research/infrastructure/2014/IR_6.pdf

3^ https://www.gov.uk/government/publications/connectivity-content-and-consumers-britains-digital-platform-for-growth

4^ Ofcom’s recent publication Public service content in a connected society reports that while PSBs continue to account for the bulk of investment in first-run non-sport UK content (around 85% in 2013), investment in new first-run UK originations has declined 17.3% in real terms

5^ Ofcom, Public service content in a connected society

6^ Ofcom’s recent publication Public service content in a connected society reports: “Non-PSB channels (the commercial PSB portfolio channels and multi-channels combined) have increased their investment in non-sport first-run originations by 43% since 2008, accounting for 15% of all non-sport investment in first run programmes in 2013, up from 9% in 2008.”

7^ By this we mean PSB channels and their VOD players

8^ Local TV however has PSB status because of its local and regional content and is granted spectrum and prominence in return. This will be important for the issue on EPG, however it is not subject to the must offer- must carry system

9^ Note that the PSB channels can be received via e.g. Sky but are not part of the bundle which is paid for by subscribers. Section 214 and 231 of the Communications Act prohibit the imposition of charges for reception of PSB services

10^ Owned by DTV Services Ltd, a joint venture between the BBC, ITV, Channel 4, BSkyB and transmitter operator Arqiva

11^ Freesat is a free-to-air digital satellite television joint venture between the BBC and ITV plc

12^ Other services like Youview offer access to broadcasting channels as part of a bundle of services for internet connection and telephony. A distinction between a pay and a free to air platform is already hard to make and will became harder in the future. However, at the moment we are going to stick with it to describe that there are some platforms where the relations between platform provider and broadcaster is different than on others

13^Telecommunications Company, which provides infrastructure and broadcast transmission facilities in the UK and Ireland

14^ On Virgin the “channel” is a portal

15^ Except in Wales, there it is S4C

16^ On Freeview, for example, this can vary from 5 channels per EPG page to as many as 12 channels per page, depending on the type of set-top box or TV with built in Freeview reception being utilised. On Virgin Media the number of channels listed is also likely to range from 6 to 8 channels per EPG page depending on whether one is using an old/basic set-top boxes or one of the later V+ HD or TiVo PVRs. It is a similar situation on the Sky platform, where the older Sky boxes display 10 channels per EPG page, but the EPG displayed by SKY+ HD boxes has fewer channels per page (currently 8 channels per page on the latest version of the EPG, which Sky began rolling out to its Sky+ HD customers in June 2012)

17^ For which they nevertheless have to pay

18^ Full obligations are set out in the PSBs’ licenses, available on the Ofcom website

19^ The value of content (where financial value will derive primarily from advertising revenue and on impact on subscriptions, but also other factors such as international sales and non TV revenues) will depend primarily on popularity with audiences and other factors, such as exclusivity. PSBs offer commercial value to platforms carrying their content, which is valued by audiences, though their attractiveness (and therefore commercial value) will vary

20^ An Agreement between the Secretary of State for Culture, Media and Sport and the British Broadcasting Corporation, July 2006

21^ Ofcom’s TPS guidelines can be found here: http://stakeholders.ofcom.org.uk/binaries/consultations/tpsguidelines/statement/statement.pdf

22^ Ofcom, Code of practice on electronic programme guides can be found here: http://stakeholders.ofcom.org.uk/binaries/broadcast/other-codes/epgcode.pdf

23^ See section 310 (4) of the Communications Act 2003. Local TV has been added by S.I. 2011/3003, http://www.legislation.gov.uk/uksi/2011/3003/article/2/made

24^ The prominence of a particular position in an EPG is thereby understood as the degree to which the share of viewing attained by a channel at that position is attributable to its position as distinct from all other features of the channel such as brand, audience loyalty, quality or appeal of content, cross-promotion or other marketing

25^ Ofcom, Public service content in a connected society, December 2014

26

27²⁶ Prominence is conceived as ensuring that the prominent supplier or product is sampled first. More generally, prominence increases the probability that a supplier or product will be considered, see: M. Armstrong, J. Vickers, J. Zhou “Prominence and consumer search” Department of Economics Discussion Paper Series, University of Oxford, 2008 http://economics.ouls.ox.ac.uk/12126/1/paper379.pdf

^ Ofcom, Public service content in a connected society, December 2014

28^ Ofcom, Infrastructure Report, 2014

29^Ofcom, Public service content in a connected society, December 2014

30^Ibid

31^ http://coba.org.uk/positions-and-reports/positions-and-reports/coba-2014-census

32^ Ofcom broadcaster returns, COBA, Oliver & Ohlbaum Associates analysis: figures, expressed in 2013 prices, include news and sport production but exclude sports rights

33^ Ofcom, Public service content in a connected society, December 2014

34^ Freesat is in the same position as Sky and Virgin in that PSBs are required to offer the channels as a result of Must Offer. Therefore it is conceivable that a PSB could choose not to supply its service to Freesat although commercial incentives may mean this is unlikely however we want to maintain requirements here to protect the 6% pf households that receive FreeSat services

35^ http://www.mediatique.co.uk/sitedata/Reports/120709_DCMS_Carriage_Conse.pdf

36^ The hypothetical model tested in the Mediatique report assumes the removal of PSB-specific must offer and must carry provisions, the removal of the TPS pricing regime and the enablement of market-based mechanisms of price discovery through the introduction of blocking mechanisms such as copyright protection and/or conditional access [P18]

37^ Technologia, “The value and optimal management of channel position and prominence on electronic programme guides”, 2012, p. 29 http://dcmscommsreview.readandcomment.com/wp-content/uploads/2012/07/The_value_and_optimal_management_of_channel_position_and_prominence_on_electronic_programme_guides.pdf

The topic was covered to a limited extent in the 2010 Shott Review for DCMS http://www.culture.gov.uk/images/publications/Local-TV-Report-Dec10_FullReport.pdf.

38^ N. Shott, “The prospects for commercially viable local television in the UK”, 2010, p 24 http://www.culture.gov.uk/images/publications/Local-TV-Report-Dec10_FullReport.pdf.

39^ http://stakeholders.ofcom.org.uk/binaries/consultations/c3-c5-finance/statement/statement.pdf

40^ Ofcom Public service content in a connected society: “Overall audience satisfaction with the PSB system remains high, and people believe that the PSB system broadly continues to deliver the purposes and characteristics”

41^ Discoverability can be achieved in a range of ways, such as being at the top of a genre listing within an EPG, being near a popular channel, or having a memorable channel number. We believe that Ofcom remains best placed to give EPG providers clarity on the application of “appropriate prominence”. Ofcom is currently reviewing their EPG code in order to clarify the assessment process of appropriate prominence

42^ Beamly is a social networking and social television platform available for mobile devices, providing an EPG and contextual information second-by-second as people watch TV

43^ As in Article 1 of the Directive 98/48/EC ‘amending Directive 98/34/EC of the European Parliament and of the Council laying down a procedure for the provision of information in the field of technical standards and regulations and of rules on Information Society services’ http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:1998:217:0018:0026:EN:PDF

44^ The UK average of HD-ready TV homes is 73%, and nearly half (49%) of households claim to have HDTV channels. Ofcom, “Communications Market Report: Scotland”, 2013, pp 45 – 46 http://stakeholders.ofcom.org.uk/binaries/research/cmr/cmr13/2013_CMR_Scotland.pdf